I know the Bible asserts that truth comes “out of the mouths of babes.” Even so, I was pleasantly surprised to find that microeconomic theory is being taught in the popular “Lemony Snicket” children’s books, which chronicle “a series of unfortunate events.”
Imagine how pleased I was to read, in a July 2 Pioneer Press article that the Snicket series “offers sharp observations about contemporary life. Lawyers, for example ‘make heaps of money’ because the books they have to read ‘are very long, very dull, and very difficult to read.’ ”
The idea that the unpleasantness of a job influences the market wages of people who do the task is not a trivial one. It is a principle largely ignored by many people who favor basing public and private sector pay on comparable worth.
Before a storm of wrath breaks over my head, let me state that I believe gender and race discrimination does occur in wages, salaries and other compensation. I do not oppose government action to stop or remedy such discrimination. All I ask is that advocates of these policies face some economic facts of life.
While not all wages and salaries are determined by supply and demand in perfectly competitive markets, market forces are ignored at the peril of society (and of the organizations that ignore them.) Supply and demand are very important, even if not unique, in determining what pay is associated with which jobs.
Market demand, the collective willingness to pay for a good or a service, depends on the benefit that performing the job brings to society. In debate over comparable-worth policies, the classic pairing off is between lower-paid day care workers and higher-paid garbage collectors. Collecting garbage and caring for children are both useful tasks that benefit society. People are willing to pay to have someone do them, either privately or through government.
But demand is only half the picture. Compensation also depends on how willing people are to do a job. The less willingness there is to do a task, the more people will have to be paid to do it, regardless of the job’s benefit to society.
The harsh fact is that more people are willing to take care of children than to ride on the tailboard of a garbage truck. Good day care workers may need more education than garbage workers. But hoisting garbage cans is rough on the body and the nose, can be cold in winter and hot in summer, and does not earn one much respect or adulation.
One can mandate that day care workers be paid more than garbage workers, but as long as underlying human preferences do not change, it will result in a shortage of garbage workers or a surplus of day care workers.
That is the genuine wisdom embodied in Snicket’s observation about lawyers’ earnings. Many of us would find being an attorney unpleasant. The work is often painfully boring. Many young people aspire to law school dreaming that they will fight for truth and justice but eventually wake up to the reality that our adversarial system of justice means that they will often have to do their darnedest to win cases for individuals or companies that they find repulsive.
The system really may be the most just and effective one for society as a whole, but individual attorneys eventually find it corrosive to their morale.
They are not much different from the men who toiled in the rendering works near my high school. Processing dead animals is a useful task for society; someone has to do it. But few people are not revolted by cutting up the carcass of a cow that died two days earlier in the heat of July.
The same is true for selling used cars. There are many upright and honest used car salespersons and then there are some dishonest ones. The competitive pressures are high, the motivation to cover up defects is strong and the need to use pressure to close deals persistent. Few people really enjoy the work over a long period of time.
Yet society depends on lawsuits being handled, used cars sold and dead animals dismembered. Regardless of what “worth” we impute to such jobs using whatever formulas or sets of principles we choose, if we do not pay enough to compensate people for their inherent distaste, we will not find workers to do them.
© 2002 Edward Lotterman
Chanarambie Consulting, Inc.